Backing Away from U.S., Tesco CEO Shops for A Winning Formula

Tesco PLC Chief Executive Philip Clarke’s decision today to give up on the U.K. grocery giant’s money-losing foray into the U.S. grocery business is pleasing investors, but now he’s got to demonstrate that his strategy for the company will produce the promised turnaround.

Mr. Clarke, who took over at Tesco in March 2011, has given skeptical investors and analysts several items on their wish list, as reported in the WSJ. Earlier this year, he moved to get out of Japan, slowed investments in China and India, and last March took personal responsibility for a turnaround program at the company’s core U.K. stores. The decision today to put the company’s U.S. Fresh and Easy unit under “strategic review,” with the likely result being Tesco’s exit from the West Coast chain, was another significant item on investors’ to-do list. As the WSJ reports, Tesco has lost £1 billion ($1.61 billion) on its five-year effort to compete with Wal-Mart Stores Inc. and others in the highly competitive U.S. grocery business. Launching Fresh and Easy one year ahead of the worst financial crisis since the Great Depression didn’t help. But Tesco also struggled to find the right competitive formula.

The WSJ’s Paul Sonne tells Corporate Intelligence today that Mr. Clarke’s now got few big strategic flourishes left to offer shareholders – other than executing his plan to revive the U.K. business. Read more in the full post.

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